TMI Blog2023 (2) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 50C and has adopted guideline value of the property as on the date of transfer. AO has allowed cost of acquisition in accordance with law and has arrived net capital gains in respect of both the properties. In our considered view, the method adopted by the AO is in accordance with law and does not called for any interference from our end. Hence, we uphold the computation of long term capital gains with regard to transfer of both the properties and reject argument taken by the assessee. Admission of additional grounds - We find that petition filed by the assessee for admission of additional grounds is not maintainable because, the assessee failed to make out a case that grounds taken by the assessee in the petition is legal issues, which can be taken at any time of proceedings including proceedings before the Tribunal. Secondly, the assessee has also failed to make out the case that facts with regard to the issues are also on record before the AO and the AO has examined the same. Since, the additional grounds taken by the appellant is purely on question of fact, in our considered view, petition filed by the assessee is not maintainable There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the financial year relevant to assessment year 2014- 15, the appellant had claimed capital loss and set off against long term capital gain. The AO, called upon the assessee to file necessary details and justify set off of capital loss against capital gain. In response, the assessee submitted that, on 14.08.2013 he had transferred land admeasuring 35 cents out of 59 cents in survey no. 913/2, Thaiyur Village, Thiruporuru Taluk, Kancheepuram and market value of the said land as on the date of transfer was at Rs. 76,30,000/-, in exchange of land owned by Smt. Ambikavathy of 35 cents out of 68 cents in survey no. 917/1B1 at Thaiyur Village, Thiruporuru Taluk, Kancheepuram, whose market value as on the date of transfer was at Rs. 72,48,500/-. The assessee on 04.09.2013, had also transferred certain plots in survey no. 912/1936/ 936/2 in the layout called IT Highway Cooperative Nagar situated at No. 46 Thaiyur Village, Thiruporuru Taluk, Kancheepuram and market value on the said land as on the date of transfer was at Rs. 1,72,16,400/-, in exchange of the land measuring to an extent of 33 cents out of 68 cents comprised in survey no. 907/1B1, Thaiyur Village, Thiruporuru Taluk, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only the stamp value as determined by the State Government for registration purposes. Further, the assessee has furnished a note on the same issue which reads as under: The assessee has exchanged a part of the plots and vacant land with another party and in that process acquired lands in the same area which is part of the business asset. This has been necessitated because the land of the party giving the land in exchange was part of the lands plotted and the other party demanded their land. Exchange is also part of the definition of transfer and the Courts have held that there should be an existing asset and two parties for the exchange. In this case the same has been complied with. The decisions relied on this account is attached herewith. Since it amounts to transfer the Capital Gain Or Loss arising out of the said exchange has to be worked based on the fair market value of the exchanged properties and not go by the original cost for one asset alone. In case of land sale, the fair value as determined by the registration authorities has to be considered. In this case the net sale consideration on the exchange is considered which is supported by court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Section 45 shall be applicable, the next question is how to compute the gain or loss arising from such a transfer. The computation of capital gain or loss is governed by Section 48 wherein it is prescribed that the income chargeable under the head Capital Gains shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts such as the expenditure incurred wholly and exclusively in connection with such transfer and the cost of acquisition of the asset and the cost of improvement thereto. Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value consideration received or accrued as a result of the transfer as per Section 50C of the Act. 3.7 Taking into account the provisions of Section 48 and Section 50C, the capital gains on transfer of the properties should be computed as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the purview of transfer defined by Section 2(47), the third deals with the capital loss arising on transfer of shares. There is no dispute on whether the exchange undertaken by the assessee falls under the purview of transfer which is also in accordance with the first two decisions relied on by the assessee. The third is the decision of the Hon'ble Calcutta High Court in the case of Central Industries Ltd vs CIT wherein it was held that when the assessee was allotted shares in Birla Cotton Spinning and Weaving Mills Ltd as a result of the amalgamation of Rajputana General Dealers Ltd and Merchandise Stores Ltd it resulted in a Capital Loss U/s 12B of the Income Tax Act, 1922. The facts and circumstances of this case are entirely different from the facts of the case of the assessee and hence the same cannot be squarely applied to the assessee's case. 3.10 n this regard, reliance is also placed on the decision of the Apex Court in Orient Trading Co. Ltd vs. CIT (1997) in 224 ITR 371 (SC) wherein it was held that were tie shares held as stock-i-trade are exchanged in return for the shares in another company, the difference between the cost of the original shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst company. The assessee accepted the said offer and received 55,100 shares of the second company in exchange of the aforesaid holding of 14,500 shares in the first company. The face value of the shares of the second Company was Rs. 10/- per share. The assessee, however, valued the shares of the second Company also at Rs. 1,45,000/- being the cost price of the shares of the first Company. The Income Tax Officer did not accept the contention of the assessee that it had not earned any profit in the transaction. He found that the market quotation of the shares of the second Company, as on 11th August, 1962, i.e., only 11 days after the close of the relevant previous year, was Rs. 10.12 per share. He valued the shares of the second company of Rs. 10/- per share and held that Rs. 5,51,000/- was the value of the shares of the second Company. He, therefore, held that the assessee had earned a profit of Rs. 4,06,000/- in the said transaction and brought that amount to tax as the assessee's income from share dealings. 12. The Hon ble Supreme Court held on the above facts as below: The question that arises for consideration is whether the surrendering of its shares in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The computation of capital gain in the case of the assessee is further strengthened by the fact includes exchange of the asset. Therefore, the Assessing Officer is correct in adopting the difference between the sale consideration u/s. 50C and the indexed cost of acquisition as the taxable capital gains. Respectfully drawing the principle from the judgement of the Supreme Court in the case of Orient Trading Company Ltd., cited supra, the addition made of Rs. 3,26,75,007/- is hereby confirmed. 6. The Ld Counsel for the assessee, submitted that the Ld. CIT(A) erred in upholding addition made towards computation of long term capital gains on transfer of certain lands in exchange of land held by other persons, without appreciating fact that there is no consideration involved in exchange of land and further, the appellant had also explained the reasons for executing sale deed in exchange of other lands. The Ld. Counsel for the assessee, referring to petition for admission of addition of grounds submitted that, alternatively the fair market value of the land received by the assessee in exchange of land held by others should be treated as cost for the purpose of computation of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion accruing as a result of transfer by applying provisions of section 50C and has adopted guideline value of the property as on the date of transfer. Further, the AO has allowed cost of acquisition in accordance with law and has arrived net capital gains in respect of both the properties. In our considered view, the method adopted by the AO is in accordance with law and does not called for any interference from our end. Hence, we uphold the computation of long term capital gains with regard to transfer of both the properties and reject argument taken by the Ld Counsel for the assessee. 9. As regards, petition filed by the assessee for admission of additional grounds, we find that the assessee has taken two grounds and argued that the lower authorities ought to have taken a market value of two properties received in exchange as part of the cost of acquisition in computing gains on sale of those two properties. First of all, we find that petition filed by the assessee for admission of additional grounds is not maintainable because, the assessee failed to make out a case that grounds taken by the assessee in the petition is legal issues, which can be taken at any time of proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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